On January 13, 2018, European directive 2015/2366, known as PSD2, officially came into force and is set to gradually revolutionise the payment and financial services offered to consumers and likewise the user experience. The services won’t only be provided by traditional operators like banks, but by multiple other players too, ranging from tech companies and the big OTT providers to the dynamic fintech sector, as is demonstrated by the enlargement of the competitive arena we are already seeing in the sector today. PSD2 legislation introduced so-called Open Banking, or shared access to data among banks and other parties offering payment or banking services, after receiving authority from customers. At the end of the implementation process, PSD2 will allow private individuals and companies to choose between different services to perform banking operations, apply for loans and make investments, promoting a more accessible, simple and affordable banking model that will benefit customers and open up the financial services market to specialised new technology-based businesses.
Digital transformation now pervades the banking and payments sector: innovative fintech startups, big hi-tech players and new digital actors are revolutionising the credit, payments and financial services market. The progressive digitalisation of payments, particularly on mobile devices, is generating a highly competitive scenario that also affects players who, like us here at SisalPay, have simplified payment services by offering them through the neighbourhood channel, consisting of our network of close and convenient retail points, and through the digital channels represented by our apps and websites.
Today, in Italy too, the financial services sector is already a fiercely competitive one, with on one hand traditional players like banks and post offices, and on the other new operators offering innovative services:
- P2P lending: platforms that match funds supplied by investors with demand for liquidity from private individuals.
- e-payment, digital payment and mobile POS services.
- Money Transfer: innovative money transfer services.
- Robo advisor: financial consulting and computer-aided investment management.
- Micro saving platforms: investment services that accumulate and invest small amounts of money.
- Peer-to-peer insurance platforms.
If we project this legal and technological scenario affecting the financial services sector into the future, it is clearly essential for banks and payment system providers like SisalPay to leverage innovation in order to support business development and seize tomorrow’s opportunities.
Innovate to grow is one of our values, particularly in this age of digital transformation, when innovation is the driver of business diversification and sustainable growth. In the early 2000s, innovation within our group was led by business line managers and had a relatively unstructured approach. In 2011, we created an ad hoc Team Innovation structure to support strategic projects for the company’s four Business Units. In 2017, with the aim of developing new digital products aligned with changing markets, we set up a special team in the Payments and Services Business Unit, consisting of twenty or so people from both inside and outside the company. In 2017, we defined the Open Innovation strategy for SisalPay as an organic part of the business and today are pursuing an action plan based on it with the aim of accelerating innovation and the digital transformation of our business in the payments sector.
Innovation models: inside-Out and Outside-In
There are two innovation models: the traditional internal model and the new Outside-In paradigm. The first creates innovation from inside through changes in the company’s skills and organisation and is already a sustainable feature of our group: in 2017, we hired 15 experts in the fields of user experience, digital marketing, operations, CRM and demand IT to form a team dedicated to the development of new products, based on a startup approach. We have created a new business within the company and given it open space offices to encourage contact and effective contamination with the company’s other departments.
The second innovation model creates interconnections with subjects outside the company, to gain access to and internalise their skills and assets, with a view to the cultural contamination of internal management, to business acceleration, to increased competitiveness and to the ability to seize new opportunities in the framework of Open Innovation.
Our open innovation strategy
Our Open Innovation strategy has the long term goal of innovating and digitalising SisalPay, generating a positive knock-on effect in terms of business growth, our people and the Sisal story. The mission of the strategy is to bring about a transformation in the Business Units in order to disseminate the culture of innovation and promote business growth linked to SisalPay through recourse to new resources, technologies and skills, and through the diversification of the SisalPay offering with new products, services and business models.
Based on this strategic vision of how open innovation can sustain business growth in the payment services sector, we have defined our Open Innovation Action Plan.
Our open Innovation Action Plan
Our Open Innovation action plan involves four initiative streams:
- Startup screening & scouting to monitor macro trends in technology and top Italian and international startups. Our partnership with Politecnico di Milano’s startup intelligence project dates back to 2014.
- Call for Ideas: in 2014, we launched the GoBeyond project, now in its second year, to encourage the development of new Italian business ideas by making it easier to turn an idea with high innovative potential into a valuable enterprise project.
- Partnerships and initiatives with leading players in innovation, like the fintech acceleration programme Magic Wand and the GIOIN innovation programme, also with Digital Magics. For several years now, we have also been collaborating with Digital360, Polihub (the incubator run by Politecnico di Milano) and Talent Garden.
- Startup adoption, involving commercial collaborations and partnerships, as well as investments in and acquisitions of startups.